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World
27 Jun 2017

Can marijuana shortage delay Canada's pot legalization?

As Canada is set to become the first major economy to legalize pot, shortage of supply poses a serious problem.

Finance minister of Ontario, Charles Sousa revealed that the supply shortage was discussed as a potential hurdle in a meeting of federal and provincial representatives.

Analysts further speculate that the supply shortage could delay the program roll-out, pushing it until the next election cycle.

In context

All about Canada's marijuana legalization

About

Trudeau's marijuana legalization policy

Canadian PM Justin Trudeau announced the marijuana legalization framework in April, with a deadline set for July 2018.

Aiming to dry out the marijuana black market, the bill allows individual states to formulate rules for distribution and sale of pot and allows for up to four plants to be grown in individuals' homes.

However, key aspects including taxation are yet to be worked out.

Financial benefits of marijuana legalization: A Canadian case

According to a Canaccord Genuity Group Inc. report, Canada's weed market is ballooning over the optimism over marijuana legalization. While combined demand for recreational and medical marijuana are estimated to touch 575,000 kg by 2021, the market could touch $4.5 billion by 2021.

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Reasons

What is causing the shortage?

The number of registered medical marijuana users in Canada touched 167,754, a three-fold increase from the previous year.

Although major producers have been aggressively working on additional production capacity, things would have to go perfectly in order to meet the demand.

Despite instituting faster growers' approval processes, plants take their own time to grow and could still fail to meet demand by 2018.

What now?

Analysis

What now?

Analysts speculate that despite efforts from companies and government to ramp up production, an initial shortage is inevitable.

Provinces and producers are further unclear on crucial issues including taxation and the type of products that can be sold.

With provinces including Ontario and Manitoba already expressing concerns over a rushed deadline, the implementation could get pushed until the next election, risking a total rollback.

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